When the most dominant player in a market stumbles, the rest of the industry pays attention. That’s precisely what happened last month, when UnitedHealth Group – the largest Medicare Advantage insurer in the country – reported disappointing earnings and a jarring shift in tone.
Speaking to the company’s first quarter results, CEO Andrew Witty described “an overall performance that was frankly unusual and unacceptable.” The company cited surging care utilization and revenue shortfalls tied to under-documented risk scores as the main culprits. Together, these pressures are expected to drive UnitedHealth’s medical loss ratio (the portion of revenue it spends on medical costs) to 87.5% for the year, well above expectations and previous performance.
The result: a rare earnings miss, a revised 2025 earnings forecast, and a moment of public contrition from a company that has long defined success in Medicare Advantage.
But this wasn’t just about one bad quarter. UnitedHealth’s stumble highlights deeper strategic questions facing the Medicare Advantage industry and signals that a more disciplined, and perhaps less profitable, era may be arriving.
And that’s before considering Andrew Witty’s abrupt exit announced just this week.
From Dominant to Derailed
For years, UnitedHealth Group (UHG) had few missteps in its Medicare Advantage strategy. With its tightly integrated Optum clinics and home health services, industry-leading Star ratings, and massive scale, UHG consistently added members and delivered reliable earnings growth.
Between 2022 and 2023, UnitedHealth added close to 2 million Medicare Advantage enrollees. It routinely emphasized the strength of its integrated model. “Our high-touch approach leads to better outcomes, including an over 15% reduction in hospitalizations, high patient satisfaction with an NPS of nearly 80 with 99% of our patients in a 4-star or higher plan,” Witty noted in a 2023 call. In 2024, UnitedHealth anticipated more moderate growth, targeting 450,000 to 550,000 new members, but still reaffirmed the fundamental soundness of its strategy.
Then came 2025.
Care utilization among seniors, which had already been running high post-pandemic, surged again, particularly for outpatient services and physician visits. To exacerbate this, UnitedHealth had absorbed tens of thousands of new members from competitors who exited certain markets. Many of those members did not engage in care in 2024, leading to lower-than-expected risk scores—and, as a result, lower CMS payments in 2025.
Witty admitted the company had misjudged the depth of the risk score problem. “We’re not executing on the model transition as well as we should,” he said in April.
A Sector-Wide Squeeze, With Different Responses
UnitedHealth was not alone in facing these pressures. Almost every major Medicare Advantage insurer (including CVS Health Aetna, Humana, Elevance Health, Centene, and Cigna) reported higher utilization and tightening margins between 2023 and 2024.
What made UnitedHealth’s experience unique was that it had typically outperformed in exactly these scenarios. But even the industry’s standard-bearer couldn’t outrun the cost trend.
Some competitors responded with retrenchment.
CVS Health’s Aetna unit, after several years of rapid Medicare Advantage growth, saw its Q4 2024 medical benefit ratio spike to 94.8 after deliberately growing its Medicare Advantage business. “We expect that we will shrink the Medicare Advantage membership by high single-digit percentage from year-end 2024. Our deliberate approach… will improve margins this year and [is] part of our ongoing commitment to restore this business to target margins of 3% to 5%,” said new CVS Health President and CEO David Joyner.
Humana, similarly, announced it would deliberately exit unprofitable plans and counties. “So we’ve got a set of [Medicare Advantage] plans that are not profitable that we don’t see a path of making them profitable,” said new CEO Jim Rechtin during last July’s earnings call. The exits amounted to ~560,00 members, or 10% of Humana’s membership base.
Cigna took an even more decisive step, selling its entire Medicare Advantage business—approximately 600,000 members—to Health Care Service Corporation (HCSC), a Blue Cross plan.
Then there’s Elevance Health. Instead of pulling back, Elevance is leaning in. After surpassing 2 million Medicare Advantage members at the end of 2024, the company expects to grow again in 2025. “If everyone’s talking about membership losses, those members are going somewhere, right,” explained Stephen Tanal, Elevance’s VP of Investor Relations.
Elevance’s higher medical expense ratio, typically in the 88–89% range, suggests it may have already built lower margins into its model. That could allow the company to absorb comparatively higher medical costs without needing to make as dramatic a pricing or benefit correction as its competitors.
UnitedHealth’s Playbook: Optum, Stars, and Scale
Even as it stumbles, UnitedHealth is still betting on its long term strategy. That strategy relies heavily on its integration with Optum, a diversified suite of clinical services.
More than 4 million of UHG’s Medicare Advantage members receive care through value-based arrangements, many via Optum’s clinics, in-home services, and pharmacy offerings. The company regularly highlights internal data showing that these members have fewer hospital admissions and higher engagement in preventive care.
In 2023, UnitedHealth noted that its HouseCalls program—providing in-home health assessments—conducted over 2.5 million visits. In theory, this allows the company to both close care gaps and ensure accurate documentation of member health status. But in 2024, many newly acquired members didn’t engage with HouseCalls or other care models, creating a risk adjustment gap. Medicare patients in Optum Health “experienced a surprising lack of engagement last year,” Witty explained in April.
Still, UnitedHealth maintained confidence. “We believe that [the problems] are largely addressable… and in no way undermine our conscience in the value-based care strategy of the company,” Witty said.
Twenty six days later, the company announced Witty was stepping down.
A Policy Disconnect: What MedPAC Sees
While payers like UnitedHealth emphasize coordination, satisfaction, and innovation, policymakers have a different view.
The federal government pays an average of 122% of traditional Medicare costs for Medicare Advantage members, according to the Medicare Payment Advisory Commission (MedPAC). In its March 2025 report, MedPAC estimated that these overpayments amounted to $83 billion in 2024 alone.
A key reason? Risk coding.
MedPAC reports that MA plans’ risk scores are 18% higher than similar fee-for-service beneficiaries. Even after CMS’s required coding adjustments, MedPAC estimates that MA plans are still paid 13% more than they would be under traditional Medicare.
UnitedHealth, for its part, defends its practices. “What we know is that Medicare Advantage cost less than traditional Medicare. We know that when a Medicare Advantage patient is in a fully delegated value-based care managed clinic like Optum Health, they will save even more money for the system, and they will have better personal experience, they have better clinical outcomes and the government spends less money,” Witty claimed in April. The company also notes that its members tend to have better preventive care compliance and fewer complications from chronic conditions.
The MedPAC report doesn’t dispute these outcomes but questions whether the MA program is delivering value commensurate with its cost. It also warns that the increasing concentration of the market—where three firms (UnitedHealth, Humana, and CVS Health) control ~60% of MA lives—could reduce competition and transparency.
Implications: The End of the Easy Era
The Medicare Advantage program has been a growth engine for payers and investors alike. And the growth of Medicare Advantage (now selected by >50% of all Medicare beneficiaries) suggests it’s been a boon for our seniors. But 2025 may mark the end of the easy era.
With cost trends rising, risk adjustment volatility increasing, and regulatory scrutiny intensifying, insurers can no longer rely on pure enrollment growth to drive profits.
Instead, success in the coming years will depend on:
- Accurate and timely risk documentation
- Pricing discipline and benefit design restraint
- Strategic enrollment (not just more members, but the right members)
- Effective engagement to drive care management and retention
UnitedHealth still has structural advantages—scale, brand, technology, and a diversified portfolio that includes Optum. But even it must now navigate a Medicare Advantage landscape that demands more precision and less optimism.
As Witty told investors: “We think that an awful lot of the issue that we’re seeing early in ’25, we can fix in ’25 and help us deliver stronger performance for ’26.”
That fix, and how quickly it materializes, may determine not just UnitedHealth’s next chapter but the broader direction of the $500 billion Medicare Advantage program.
One thing is clear: fix or no fix, it will come without Andrew Witty at the helm of UnitedHealth Group.
